WORKING PAPER: Understanding ‘bankability’ and unlocking climate finance for climate compatible development

This working paper focuses on understanding the concept of ‘bankability’ in support of the development of quality climate project proposals – to assist countries’ access to international climate finance.

The Green Climate Fund is currently the largest multilateral climate fund, and climate change and development practitioners alike are focused on seeing these resources flow. The Green Climate Fund represents a critical source of climate finance for developing countries and the fund has been at the centre of future prospects for financing climate change action. The climate finance landscape extends beyond the parameters of the Green Climate Fund, however, and the availability of funding from various sources – national and international, public and private – means that the climate finance arena is a complex and dynamic one to navigate.

If countries are going to access the scale of funding required, it is critical to consider the full spectrum of funding sources and their requirements, as well as the different mechanisms available from them, and how they can be combined. This makes the process of accessing climate finance especially complex.

The critical challenge remains for developing countries to ensure access to those funds, in order to adapt to the impacts associated with the current and future climate, and to support the implementation of their Nationally Determined Contributions (NDCs). This challenge, particularly in relation to meeting the stringent requirements of prominent funds like the Adaptation Fund and the Green Climate Fund in particular, is evident in the slow absorption of the available finance flows.